Opinion of Advocate General Van Gerven delivered on 3 March 1993

1 Original language: Dutch.

2 OJ 1990 L 350, p. 82.

3 OJ, English Special Edition 1970(1), p. 218. See also Regulation (EEC) No 283/72, cited in footnote 8 below. These general rules have been supplemented by specific rules for the various agricultural sectors.

4 Article 2(1) and Article 3(1) relate more specifically to refunds on exports to third countries and intervention to stabilize the agricultural markets, respectively. Article 1(3) is concerned with financing by the Guidance Section of the EAGGF.

5 Regulation (EEC) No 1723/72 of the Commission of 26 July 1972 on making up accounts for the European Agricultural Guidance and Guarantee Fund, Guarantee Section (OJ. English Special Edition, Second Scries, III- European Agri cultural Guidance and Guarantee I-'und, p. 109).

6 Case 326/95 Netherlands v Commission [1987] ECR 5091, paragraph 7. It also follows from the objective, strict nature of the clearance of EAGGF accounts that there is no room for the application of a de minimis rule (Case C-335/87 Greece v Commission [1990] ECR I-2875) and that the Commission has no discretionary power to derogate from the rules regulating the allocation of expenses (Joined Cases 15/76 and 16/76 France v Commission [1979] ECR 321, paragraph 28).

7 Case 11/76 Netherlands v Commission [1979] ECR 245, paragraph 25. This exception is connected with the second paragraph of Article 215 of the EEC Treaty and Article 8(2) of Regulation No 729/70.

8 Sec also Article 5(1), Article 4(1) and the second subparagraph of Article 8(2) of Regulation No 729/70.

9 The Commission is also entitled to require a Member State to set up an administrative inquiry in which members of the Commission's staff may take part under Article 6 of Regulation (EEC) No 283/72 of the Council of 7 February 1972 concerning irregularities and the recovery of sums wrongly paid in connection with the financing of the common agricultural policy and the organization of an infor mation system in this field (OJ. English Special Edition 1972(1), p. 90).

10 Case C 281/89 Italy v Commission (1991] ECR I 347, paragraph 19

11 The duty imposed on the Member States by Article 5 of the EEC Treaty and Article 9(1) of Regulation No 729/70 to provide the Commission with all the data necessary for control purposes is also relevant in this connection; sec sec lion 7 above.

12 Opinion in Case C-281/89 Italy v Commission [1991] ECR I-354, section 18.

13 Case C-281/89 Italy v Commission [1991] ECR I-347, paragraph 20.

14 Case 347/85 United Kingdom v Commission [1988] ECR 1749, paragraph 60.

15 The additional levy was introduced by Council Regulation (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (OJ 1984 L 90, p. 10). Article 5c(5) of Regulation No 806/68, as amended by Regulation No 856/84, provides that the additional levies shall be regarded as intervention measures designed to regulate agri cultural markets .... Accordingly, they come within the financing rules laid down by Regulation No 729/70, which I discussed earlier; see footnote 3 above.

16 The third paragraph of subsection (a) of section 4.3.10.3 of the summary report on the results of the checks carried out for the purposes of the clearance of the accounts of the Guarantee Section of the EAGGF for 1988 (Commission document VI/220/90; definitive version, including all addenda and amendments, of 23 November 1990); hereinaf ter the summary report.

17 This is clear from Article 5(1) of Regulation No 804/68, cited in footnote 14, and from the second recital in the pre amble to amending Regulation No 856/84. I can find no indication in the written or oral procedure in this case that Italy might contest this point.

18 Commission Regulation (EEC) No 1546/88 of 3 June 1988 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation (EEC) No 804/68 (OJ 1988 L 139, p. 12).

19 Article 16(1) in fine of Regulation No 1546/88: This statement shall also cover sales of milk products produced on the farm to wholesalers, cheese curers or retailers.

20 The premiums are granted pursuant to Council Regulation (EEC) No 1837/80 of 27 June 1980 on the common orga nization of the market in sheepmeat and goatmeat (OJ 1980 L 183. p. 1).

21 The manner and methodology of the audit are described in section 3.3.6.2.3 of the summary report.

22 This emerges both from Italy's arguments in the written procedure and at the hearing and from documents pro duced by the Commission, in particular a letter dated 22 September 1990 from the Italian intervention agency AIMA to the Commission.

23 This is true in particular of the method of ascertaining the age of the animals from their weight, which Italy contests. It appears from the documents appended to the Commission's defence that that method is prudent and reasonable and was sufficiently reasoned vis-à-vis the Italian authorities.

24 The Commission has observed, and the summary report confirms, that it did in fact also make specific findings relating to a number of actual irregularities. However, this is not a renuircment in order for the Commission to reach the conclusion that there arc insufficient controls.

25 Cf. the judgment in Case 214/86 Greece v Commission [1989] ECR 367 (summary publication only). In that case, the Member State argued that the Commission was not entitled to base a financial correction on an analysis of samples taken at the time when cereals were sold after two years in store, but should have examined the quality of the cereals at the rime when they were taken into intervention. In paragraph 17 of the judgment, the Court held in response to that argument that it was for the Member States to satisfy themselves that transactions financed by the EAGGF were actually carried out and executed correctly. It was not the duty of the Commission to check the regularity of each intervention measure.

26 The 11th paragraph of that letter reads as follows: It is clear that the card system used in other sectors will enable the aid granted under the measure concerned to be supervised fully and effectively.

27 See also as regards the use of extrapolation my Opinion in Case C 8/88 Germany v Commission [1990] ECR I 2334, sections 29 and 30, and the Opinion of Advocate General Gulmann of 17 March 1992 in Case C 385/89 Greece v Commission, [1992] ECR I-3225, sections 54 and 55.

28 Article 5 of Regulation (EEC) No 1467/70 of the Council of 20 July 1970 fixing certain general rules governing inter vention on the market in raw tobacco (OJ, English Special Edition 1970(11), p. 497) provides that nly tobacco corresponding to the minimum quality characteristics to be defined on the basis of classification by variety and quality shall be bought in by the intervention agencies. Those characteristics arc defined in Article 6(2) and Annex III of Regulation (EEC) No 1727/70 of the Commission of 25 August 1970 on intervention procedure for raw tobacco (OJ, English Special Edition 1970(11), p. 592).

29 Case C-366/88 France v Commission [1990] ECR I-3571.

30 See section 2 et seq., in particular section 6.

31 Case C-385/89 Greece v Commission [1992] ECR I-3225.

32 Paragraphs 20 and 21 of the judgment.

33 Or in the judgment in Case C 385/89 Greece v Commission, cited in footnote 30, because the question could be avoided at the procedural level.

34 Case 214/86 Greece v Commission [1989] ECR 367 (summary publication only).

35 See footnote 2.

36 In paragraph 18 the Court refers to the fact that the annulled measure could impose financial burdens on the private persons concerned.

37 In section 33 of his Opinion in Case C 366/88 Hance v Commission [1990] HCR I 3593, Advocate General Tesauro suggested that the operative part of the judgment should be based solely on Article 9(3) of Regulation \'o 729/7C

38 This docs not mean that analyses carried out by the Com mission in the context of the clearance of EAGGF accounts vis à-vis the Member States can have no implications for the relationship with recipients of aid. It appears from the factual background to the judgment in Pftrnzzi und Longo that the Italian authorities used the findings made in the analyses carried out by the Commission in their relation ship with the private parties involved.

39 Case C-240/90 Germany v Commission [1992] ECR I-5383, paragraph 19.

40 Section 4.9.2.1.5 reads as follows: ... It is accepted that leaves which are substantially less than whole and more than a third of whose surface is damaged should not be taken into account in calculating the correction because those defects could have occurred when the sample was being taken or during transport. The financial correction was adjusted accordingly.

41 Article 5(2) of Regulation No 729/70 provides that the Commission, after consulting the Committee for the Euro pean Agricultural Guidance and Guarantee Fund, is to make up the accounts in accordance with the procedure laid down in Article 13 of that regulation.

42 Section 5.1 of the summary report.

43 According to Article 2(5) of Commission Regulation (EEC) No 3472/85 of 10 December 1985 on the buying-in and storage of olive oil by intervention agencies (OJ 1985 L 333. p. 5), intervention agencies arc to check the quality of the olive oil offered for intervention against the quality charac tcristics set out in Article 35 of and the annex to Regulation No 136/66/EEC of the Council of 22 September 1966 on the establishment of a common organization of the market in oils and fats (Ol, English Special Edition 1965 1966, p. 221), as specified by Commission Regulation (EEC) No 1058/77 of 18 May 1977 on the characteristics of olive oil and of certain products containing olive oil and amending the Common Customs Tariff nomenclature as regards olive oil (OJ 1977 I. 128, p. 6).

44 That inquiry seems moreover to constitute a praiseworthy example of collaboration between national authorities and the Commission.

45 By letter of 2 November 1989, which the Commission has produced to the Court. Moreover, Italy confirmed its acceptance both during the written procedure and at the hearing.

46 Judgment of 10 October 1991 in Joined Cases C-161/90 and C-162/90 Petruzzi and Longo [1991] ECR I-4845. This to the judgment to which I referred above (section 23).

47 In the absence of proof that the plea is based on information which was not known until during the written procedure, that plea is also inadmissible under the first subparagraph of Article 42(2) of the Rules of Procedure.

48 Telex messages from the Commission to the Italian author ities dated 13 June 1986, 10 October 1986 and 5 August 1988.

49 Only one indication is on the file and it is contained in a document lodged, not by Italy, but by the Commission. This is a letter dated 2 November 1989 from the Italian authorities to the Commission, the fourteen paragraph of which reads as follows: The recapitulative tabic shows that all the lots were sold at prices corresponding to the declared quality of lampante virgin olive oil, which rules out any etcrioration in quality due to bad storage or the presence of olive residue oil. Apparently, the table in question was appended to the letter, but it is not in the file lodged with the Court. In any event, it is for Italy to substantiate us complaints by adducing evidence.

50 Sec the telex message of 5 August 1988 from the Commis sion to the Italian Ministry of Agriculture appended to the Commission's rejoinder.

51 The system is based on Council Regulation (ITC) No 1491/85 of 23 May 1985 laying down special measures in respect ot soya beans (OJ 1985 L 151. p. 15).

52 Council Regulation (EEC) No 2194/85 of 25 July 1985 adopting general rules concerning special measures for soya beans (OJ 1985 L 204, p. 1).

53 Commission Regulation (EEC) No 2329/85 of 12 August 1985 laying down detailed rules for the application of the special measures for soya beans (OJ 1985 L 218, p. 16).

54 Commission Regulation (EEC) No 2537/89 of 8 August 1989 laying down detailed rules for the application of the special measures for soya beans (OJ 1989 L 245, p. 8).

55 Case C-8/88 Germany v Commission [1990] ECR I-2321, paragraph 20.

56 The aid was introduced by Article 10 of Regulation (EEC) No 2727/75 of the Council of 29 October 1975 on the common organization of the market in cereals (OJ 1975 L 281, p. 1).

57 Cited in footnote 8.

58 A similar form of words, albeit fairness is not mentioned, also appears in section 5.4.3 of the summary report.

59 Articles 2 and 3 of Regulation No 729/70. considered above.

60 Opinion in Case 347/85 United Kingdom v Commission [1988] ECR 1768, section 76.

61 In itself, this docs not raise any problem of legitimate expectations or legal certainty, since the Member States assume the fundamental responsibility at management level and arc involved throughout the procedure for the clear ance of EAGGF accounts; sec my Opinions in Case 267/87 Netherlands v Commission [1989] ECR 225. section 12, and in Case C-8/88 Germany v Commission [1990] ECR I-2334, sections 21 and 22.

62 Case 349/85 Denmark v Commission [1988] ECR 169, paragraph 19. See also the judgment in Joined Cases 15/76 and 16/76 France v Commission, cited in footnote 5, where it is stated that the Commission has no discretionary power to derogate from the rules regulating the allocation of expenses. I am therefore unable to agree with the view which has on occasions been expressed by the Commission in this case to the effect that, by not effecting a financial correction, it granted a favour in respect of the financial years prior to 1987. The Commission is not entitled to grant favours at the expense of the Communities' budget.

63 In contrast, the Commission docs have a margin of discre tion in evaluating the amount of the financial correction (Case C 281/89 Italy v Commission [1991] ECR I 347, paragraph 24).

64 In its reply, Italy refers more specifically to an internal Commission document (No VI/325/83) on the use of extrapolation. The Commission has correctly pointed out in its defence that the document does not cover situations in which defects have been found in the control machinery of a Member State.

65 Sec my Opinion in Case C-8/88 Germany v Commission, cited in footnote 26, section 21, and the judgment in that case, paragraph 20.

66 Moreover, the clearance of EAGGF accounts cannot be regarded as a penal operation. It is an objective procedure conducted in a more general context of joint management. See, inter alia, the Opinion of Advocate General Mischo in Case 347/85 United Kingdom v Commission, cited in footnote 59, section 77, and the judgment in that case, at paragraph 57.

67 Sec section 7 above and also footnote 62.

68 Italy refers in this connection to Commission Regulation No 1738/89 of 19 June 1989 laying down detailed rules on production aid for durum wheat (OJ 1989 L 171, p. 31), as subsequently amended.